Using a unique dataset that matches banks with their client firms, we investigate the differences between foreign and domestic banks in a developing country. In particular, we are interested in examining how foreign banks solve the information asymmetries that characterize lending relationships...

In a newly liberalized credit market, foreign banks with cost advantages are likely to be less informed than domestic banks that hold information on credit risks. These relative advantages may generate incentives for a foreign bank to negotiate acquisition of a domestic bank in order to capture...